On May 16, 2019, I presented at the annual Economic Summit. Shortly thereafter an article appeared in the Independent about the event. The article was well-written; however, there were some subtleties that caused some confusion and misinterpretation — and not the fault of the journalist. During the talk I gave a brief discussion of the nonprofit sector and showed a graph of the size of contributions in the county. At the time I mentioned that Direct Relief continues to grow. However, contributions to nonprofits other than Direct Relief fell. “Total contributions to S.B. County nonprofits crested $1.5 billion, with the lion’s share going to Direct Relief. In fact, year after year, data show Direct Relief is absorbing a growing percentage of all philanthropic giving. Not so good,'” I was quoted as saying; that was an unfortunate utterance by me. I take full responsibility for the misinterpretation surrounding the graph and the all-too-brief discussion. The language was too loose and open to all kinds of interpretation. The “absorbing a growing percentage” is the problem and was not intended to mean there was a fixed amount in the county and Direct Relief was taking more of it. I was taken to task by high-ranking individuals at Direct Relief, and rightly so. Mea culpa.

What are the facts and where did I go wrong? Well, the graph is certainly accurate as far as information obtained from the 990 tax forms. The problem is that my words made it seem as if Direct Relief was growing at the expense of other nonprofits. Nothing could be further from the truth. Direct Relief does not compete with other nonprofits in Santa Barbara for funds.

Here is really what is going on and should have been articulated. Typically over 90-95 percent of Direct Relief’s revenue is from non-cash product — most all of which is in the form of medications and medical supplies and all from sources outside Santa Barbara. Direct Relief’s model encourages the donation of such items, the value of which reflects their regrettably high market prices over which, obviously, Direct Relief has no control; they must be reported as revenue in Direct Relief’s financial statements. The percentage of total revenue attributable to such in-kind contributions has always been disproportionately high and will likely remain so.

The charts I displayed are based on public data that reflect only philanthropic support that flows to and is received by Santa Barbara County nonprofits — not the location from which the support flowed or overall philanthropic contributions made by sources within Santa Barbara County. This means that contributions from parties outside Santa Barbara County to locally based organizations such as Direct Relief or universities such as UCSB are reflected, whereas contributions by local residents to organizations located outside S.B. County are not.

Direct Relief is an amazing company, doing amazing things for the world. I hold them in the highest regard, as they well know, having been friends for years. I cannot apologize enough for any harm my remarks may have done.


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